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Eurasian Economic Union: the story so far

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Eurasian Economic Union: the story so far

July 1st 2016 will mark 18 months since the official launch of the Eurasian Economic Union (EAEU), with Belarus, Kazakhstan and the Russian Federation as the founding states. What has the Eurasian Economic Union so far achieved?

There have already been two rounds of enlargement: Armenia swiftly joined in January 2015 and Kyrgyzstan eventually acceded in August the same year. Building on the Customs Union and Single Economic Space of the now-disbanded Eurasian Economic Community, the EAEU promises the benefits of regional economic integration and positions itself as an alternative to closer integration with the European Union (EU). At a recent economic forum in St. Petersburg, Russia’s President Putin raised the prospect of a greater Eurasian partnership that could embrace China, the Indian sub-continent and Europe.

In spite of these grand ambitions, has the Eurasian Economic Union to date been a success? On the economic front, the EAEU had the misfortune of coming into existence at time when Russia was entering an economic downturn. Since 2014 there has been the imposition of sanctions following the Ukraine crisis, a devaluation of the ruble, and a fall in oil prices. Rather than acting as an engine driving regional growth, Russia’s difficulties have had a detrimental knock-on effect for EAEU member states. Other national currencies have had to devalue, and internal trade turnover between member states has actually decreased since the EAEU was launched.

Dissatisfaction with EAEU was expressed at a recent summit in Astana. Belarus’ President Lukashenka commented that there were still hundreds of exclusions to the organisation’s free trade rules. Kyrgyzstan’s President Atambayev complained that his country was not yet seeing much in the way of benefits of membership. Moscow, which imposed an import ban on certain Western goods without consultation with its Eurasian partners, is unhappy that prohibited products can still find their way into Russia via Belarus or Kazakhstan. Relations are strained between Kazakhstan and Armenia over renewed tensions between the latter and its neighbour Azerbaijan, an ally of the former.

This disappointment has not yet translated into calls to abandon the EAEU however. Many smaller member states secured lucrative short-term concessions from Russia in return for joining. These included cheap oil and gas for Belarus and Armenia, and investment projects for Kyrgyzstan. Furthermore, the potential consequences of rejecting Moscow’s overtures to participate in Eurasian integration projects in favour of alternatives have been all too clearly demonstrated in the case of Ukraine. Russia’s geopolitical assertiveness may mean that while EAEU member states will continue to pay lip-service to the advantages of Eurasian integration, they will also strive to improve ties elsewhere in a bid to balance Russian pressure. Belarus is actively seeking to normalise relation with the EU while Kazakhstan is closely following China’s One Belt, One Road (OBOR) initiative.

In Putin’s 2011 Izvestia article which proclaimed his ambition to launch a new integration project for Eurasia he promised it would serve as a bridge between Europe and the Asia-Pacific. In the troubled 18 months since its launch, the EAEU has not yet demonstrated the capacity to fulfil that ambition. Its ultimate purpose and feasibility remains in question.

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